Rapid adoption of smartphones is driving a mobile Internet boom in Vietnam, only 18 months since the country’s operators switched on their first 3G networks. According to the latest Wireless Intelligence estimates, 3G connections in Vietnam surpassed 20 million in Q2 2011, representing around 18 percent of the total base. This has been achieved despite carriers operating in a price-sensitive market where the vast majority of subscribers (over 85 percent) are prepaid.
There are currently four 3G licensees in the country: Mobifone, Vinaphone, Viettel and a consortium comprising CDMA player EVN Telecom (E-Mobile) and Vietnamobile. Vinaphone, a subsidiary of state-owned incumbent VNPT, was the first off the blocks launching a commercial 3G service in October 2009, initially in key metro areas such as Hanoi. Mobifone launched 3G services two months later (December 2009), followed by Viettel in March 2010 and Vietnamobile/EVN Telecom in June 2010.
According to recent data released by Vinaphone, smartphone users now account for 29 percent of the country’s total customer base – a proportion comparable to (or better than) most developed mobile markets. Growth in smartphones over the last year is attributed to the rise of Android-based models, which accounted for 26 percent of the country’s smartphones in April 2011, up from just 2 percent a year previously. Apple’s iPhone has also grown its share over the same period, rising from 21 percent to 30 percent. Symbian-based devices still account for the largest portion of Vietnamese smartphones – 39 percent – but have suffered an alarming decline in market share over the last year, falling from a high of 75 percent in March 2010. Other smartphone platforms make up the remaining 5 percent, and include RIM (2 percent) and Windows Mobile (1 percent).
Samsung was named as the leading Android vendor in Vietnam with a 28 percent share, followed by HTC (22 percent), Sony Ericsson (11 percent) and LG (10 percent).
Vinaphone said that data services revenue now accounts for over 5 percent of its total network revenue. It notes that it has 7 million unique mobile data users a month with average data usage running at 7MB per user per day. The operator predicts a 108 percent growth in data traffic between 2009 and 2014 (CAGR), with mobile video accounting for about two thirds of its traffic by this point.
According to our latest data, some 10 percent of Vinaphone’s 34.3 million subscribers have upgraded to 3G-enabled devices. Migration is occurring at an even faster pace at many of its competitors: market-leader Viettel had migrated 12 percent of its customers to 3G by Q2, while second-placed Mobifone had migrated a quarter. These three state-owned operators account for over 90 percent of the total market combined. VNPT – the parent of both Vinaphone and Mobifone – is currently building an LTE network in Hanoi, while military-owned Viettel is doing so in Hanoi and Ho Chi Minh City in cooperation with Huawei.
Investment in mobile broadband networks and services comes at a time of increasing competition among the Vietnamese networks, mainly due to measures undertaken by the government in recent years to liberalise the mainly state-controlled market. There are currently only three foreign operator groups involved in the market – Hong Kong’s Hutchison (Vietnamobile), South Korea’s SK Telecom (S-Fone) and Russia’s VimpelCom (Beeline) – but none of these currently represent a major threat to the large state-owned firms. Indeed, SK Telecom announced last year it was ceasing to invest in S-Fone, citing the CDMA operator’s inability to keep pace with its GSM rivals. S-Fone has since slipped to sixth in the market, behind CDMA rival EVN Telecom.
Market growth has also been impacted by moves last year by the regulator to force operators to register their prepaid users and set a cap of three SIMs per user. However, inactive prepaid SIMs are still thought to account for a significant proportion of the country’s installed base.
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